+ can the usa be saved? +

  1. 22,691 Posts.
    Not under the present leadership, I think.

    There is too much preoccupation with smoke and mirrors while the spin doctors are flat out giving a positive recount.

    An example is the budget coming up. The war in Iraq is now running at close to $US200 bill/year. This won't be in the budget but will be off balance sheet.

    Their preoccupation with terrorism has no limits; at the same time vital relationships are not attended to. Europe blames Bush not only for the Iraq episode but also for "promoting" terrorism (No approval from UN to invade Iraq, causing a massive loss of life and destruction of property).
    Inviting increasing resistance by Islam fundamentalists and generally strengthening their cause not only in the Middle East but activating it in Europe as well.

    While Russia had a good relationhip with the US before, Bush has allowed it to turn sour and has driven them much closer to China.

    He is going to regret this as both Russia and China are very active in IRAN, the country who will back the possible future SHIA Govt in IRAQ, (The implication is that the US will have shed a lot of blood in Iraq so Iran can take over)

    So, the US international policies have been disastrous and are continuing to be so. They have been expensive with only negative returns.

    These are growing at high levels. Govt debt alone runs at $US7.4 trillions alone. There are others:

    That page presents a distressing situation in nearly every field.
    "Switzerland had $5,972 in foreign reserves per person in 2000, 24 times more per person than the U.S. (in Feb. 2004 the Swiss increased 40% to $8,333 per person)".

    Suffice to say most numbers are out of date. It takes about $US2.1 bill/day to finance the Current Account Deficit.
    Jim Sinclair:
    "Let's not forget the reduction in taxes from over 30% to 5% if US companies repatriate foreign funds into USD coming back into the United States and make US investments such as buying US bonds with those funds".

    This does show the weak state, the US is in.

    CONSUMPTION: Richebacher: Consumption has priority in the US; about 2/3 of GDP is normally devoted to that. It rose to 89% in the third quarter of 2004"

    SAVING: Currently about 0.2% against 48% by the Chinese. The US it up to its ears in debt. However, they do have a large investment in housing.

    Kurt Richebacher: "It is typically argued that the U.S. economy is importing too much in comparison to exports. Superficially, that is true. Yet on closer look, it is a mistaken perception. Compared to other industrialized countries, U.S. imports are very low as a ratio of GDP.

    The true key problem is abysmally low goods exports, accounting lately for barely 7% of nominal GDP. This compares, by the way, with a German goods export ratio of 35% of GDP".

    This is designed to lower the cost of goods and thereby lower inflation. It is also destroys the manufacturing base; skills and technology are transferred to China and India instead. Creation of jobs is now mainly in the service industries. Manufacturing requires capital formation and this is low.

    The CPI is 3.5% (energy and food included) but researchers say it is about 6%. The GDP is overstated according to these sources.

    MONETARY AND FISCAL POLICIES: These promote consumption. LOW interest rates have lagged behind inflation rates. Hence, much cash went into speculative ventures instead of productive purposes.

    That is now 83 having hit a low of 81. The outlook is bleak although it may get support at some stage. Estimaters mentioned 60 at some stage; some now come up with 40. A low USD will make living in the US very expensive and the politicians are well aware of that. The EEC, Japan and others like a higher USD so they can compete against the US on exports.

    International policy has acted against the interest of the US. A much more sensitive approach needs to be taken.
    Fiscal and monetary measures have lead to very high consumption. This has to change. Some urgent Formation of Capital in the export sector needs to take place. Some realistic way of cutting the deficits will need to be found.

    Continuing Outsourcing means that the Current account deficit will increase unless compensated for by Exports and Invisible payments. Much remains to be done in this field.

    It is doubtful that the current regime will take the hard measures bar talking about it.


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